The premise of Basketball Nightmare is that you are the captain of the Home Boys of Hometown High and tomorrow the All-American High School Championship starts. Understandably nervous, the captain goes to sleep wishing he had more time to practice. A knock at the window follows, where a vampire invites him to come play against some monster teams. He accepts and it turns out the rest of the team has also arrived. The Home Boys play as if their lives depend on it and win, upon which the captain awakens. Confused, he does feel he's gotten the practice he wished for.
There are three modes to the game: CPU vs CPU, Single Play, and Versus Play. Single Play is the aforementioned dream scenario in which the player has to beat six monster teams at basketball. CPU vs CPU and Versus Play are the championship and feature only human teams from the following countries: United States, Japan, China, East Germany, Cuba, Soviet Union, Canada, and France. All teams, both human and monster, play the same.
Basketball Nightmare contains examples of:
- All Just a Dream: The entire single player mode in which a human team plays basketball against six monster teams is but a dream, conjured up from a wish to have a little more practice before the All-American High School Championship the next day.
- All There in the Manual: The entire story to the game can only be found in the manual. It's a recommended read to avoid confusion about why you play against monsters in single player mode and against humans in the other modes.
- Creepy Cemetery: The Witches of Northwick are played against at a cemetery next to a bamboo forest.
- Cyclops: The third monster team challenged are the Little Cyclopes at the Waterfall. They're hitotsume-kozō.
- Kappa: The second monster team challenged are the River Turtles at the Lake. They're kappa.
- Mage Species: By virtue of being one of the monster teams, the Witches of Northwick are witches by species. They don't quite look human either, as they have blue skin and a persistent malicious countenance.
- Our Vampires Are Different: The fourth monster team challenged are the Blood Suckers at the Cave. They're vampires with capes and top hats.
- Our Werewolves Are Different: The first monster team challenged are the Blue Wolfmen. They're pink werewolves.
- Palette Swap: The human teams all share the same sprite. For diversity, they do all have their own palette.
- Resigned to the Call: The captain of the Home Boys is invited by a vampire to come play against some monster teams. Dream logic is at play and when the captain looks down at himself he sees he's wearing his uniform. He reasons that he ought to go play basketball then.
- The Smurfette Principle: Courtesy of each team consisting of members with the same sprite, female presence is limited to the Witches of Northwick. Their team is one of six monster teams, and one of fourteen teams total.
- Tengu: The last monster team challenged are the Tengun Terrors at the Shrine. They're wingless hanataka tengu.
- Vengeful Ghost: The fifth monster team challenged are the Witches of Northwick at the Cemetery. They're yurei with blue skin and perpetually closed eyes.
